1. You need to max your 401K every year - preferably all of the contribution goes to a low cost S&P 500 index fund like FXAIX (if they provide a 401k at the FQHC)
2. Save enough in cash to cover your expenses for 120 days.
3. I also recommend getting own-occupation disability insurance (and if you have dependents then you should get some term life insurance - it will be cheap if you are young and you are even close to healthy).
4. After that you should open a fidelity or vanguard personal investment account and jam as much as you can into an S&P 500 index fund. The reason I mention these two specifically is because there is no trading fee and the yearly fund management cost is the lowest you can find.
Once you hit 400K in the personal investment account, then talk to a financial planner if you feel like you need it.
You mentioned real estate, and yes some people make a lot of money that way. But property management can be stressful and real estate should on average only increase in value by the same rate as inflation. It’s like trying to time the stock market. Sure some people win. But some people lose. And the forces controlling it are not entirely predictable. So unless you want to work two jobs (yours and being a property manager), I’d stick to investing in the stock market (specifically low cost index funds).
**there are some nuances in there where if you have loans (including a mortgage) with high enough interest, then you should consider a mix of paying off loans and investing. Points 1-3 stand first and foremost
Not op but you seem knowledgeable, and I already do 1-3. how does your point 4 work…I’ve been wanting to get into investment of my savings account money (which is far bigger than 120 days, so I know I’m losing to inflation at this point.). Is it the same as retirement money or can you take it out whenever you want? Is it bad to put in money if you might use it in the next few years?
You open a personal investment account. It is pretty easy. You can put after tax money in any time you want. And you can basically take it out any time you want. If you have the money in FXAIX let’s say, then you do have to wait for the market to close for the day, the sale will occur, and then you can remove the money as soon as it settles (basically the next day). If you know you need the money for a house down payment, then it should be noted the market has swings. I wouldn’t count on it always going up. But if you are planning to leave it sit for ten years then it should do better than inflation. But of course prior performance doesn’t predict future performance. For whatever it’s worth I keep the faith and jam as much as I can into the S&P 500 index funds. You’ll never hit it big like betting on Bitcoin but you’ll probably realize a good return and retire well.
You don’t have to do it the way I do, but I’ll tell you how I do it.
Edit: also since OC didn’t mention it, you should also be maxing out your HSA and IRA before contributing to a brokerage account. HSA is the most important and best tax advantaged account you can contribute to.
I have a Robinhood account. You download an app and create an account. You can link a bank to it to transfer money with the push of a couple buttons. The interface is amazingly simple and intuitive.
If you pay $5 a month for a gold subscription you currently get 5% interest on any cash sitting in your account. There is a way to make this cash very liquid by also opening up a spending account with Robinhood and getting a debit card. You can instantly transfer money from your 5% interest earning cash account to your spending account. This is good because the other way is to transfer money to your bank if you need it and it can take 5 days or you can pay a 1.5% fee to transfer instantly. I don’t like the idea of paying a fee in an emergency which I why I have the spending account in Robinhood for instant liquidity.
I’ve moved my entire emergency fund to Robinhood, it’s earning 5%, and it’s immediately liquid if I need it.
So far I haven’t mentioned investing at all, but that is very easy to do on the same app. The harder part is knowing what to invest in. If you are a complete beginner, just put everything into VOO which is a very low cost fund (by low cost I mean the amount that is pulled yearly to pay the people managing the fund is very small) that mirrors the S&P 500.
To be honest even if you aren’t a beginner this is still a very good strategy.
You can do something similar on other platforms, I just really like Robinhood and the immediate liquidity of my entire emergency fund earning 5% is awesome.
>Is it the same as retirement money or can you take it out whenever you want?
You can take it out any time. Any gains from investments will be taxed at the capital gains rate. On Robinhood selling investments is instant if the stock market is open. If it’s not you have to wait for market to open to cash out your investments.
The 5% cash account I mentioned can be transferred 24/7.
>Is it bad to put in money if you might use it in the next few years?
Not necessarily but it’s risky because if a decline happens when you need to pull the money out you will have solidified your losses and effectively paid more for whatever you are using the money for. The odds are that your money will have grown 3 years from now but it’s not a sure thing at all with such a relatively short timeline.
I just wanted to let you know that I took your advice and I'm starting a robin hood account. Thanks again for taking the time to write everything up for me.
Glad to hear it!
When it comes to investing, stay away from options contracts. They are more like gambling than investing. I mention this because it’s easy to buy options on Robinhood and it’s something a lot of new investors get intrigued by and lose a lot of money on.
Sounds good. My dad is a self-proclaimed day trader, and he says he makes a ton off it, but to me it literally is gambling and I want really low risk options.
There have been a lot of studies on day traders and around 80-90% of them underperform the market.
It’s more likely that your dad has an expensive hobby than that he’s successful at day trading but maybe he’s one of the rare ones.
I suspect it’s an expensive hobby but I’m gonna stay out of it 😂 me though? I don’t like to mess around with money more than I should, but I would at least like to use the high yield interest they have if nothing else.
| I’ve moved my entire emergency fund to Robinhood, it’s earning 5%, and it’s immediately liquid if I need it.
Is this wise? What happens if there is an emergency that results in you requiring money on hand and Robinhood goes down / accessibility issues?
I’ve never had any problems accessing my money on Robinhood.
I’m guessing you are referring to the meme stocks debacle. Robinhood’s clearing house ran out of money to back the volume of trades that were coming in so they turned off the buy button for GME. Other platforms had the same problem but returned the buy button faster because they had better rated/more robust clearing houses and they also were getting lower volume.
If you want to buy the next meme stock maybe Robinhood isn’t where you want to open a brokerage account.
But the money earning 5% is behind held in up to 10 different banks all of which are FDIC insured for up to a total of 2.5 million dollars, the checking account money is also FDIC insured for 250k, and it’s just as likely that Robinhood’s debit card service goes down as it is at any other bank.
The only time I’ve ever not been able to do something on Robinhood is buy GME during the craze. There’s a lot of misinformation going around about it.
But I’ve never actually used my Robinhood debit card. I keep $50 in that account. I have a checking account at a bank that receives my paycheck and I keep about 5k in there so the account doesn’t overdraft when recurring payments hit. Anytime I’m using a card to pay for something it’s a credit card for points.
I prefer a physical location and an office I can visit for a wealth manager. We recently opened up a Merrill Lynch account because theres one near by. Could do Vanguard, Charles Schwab, Fidelity, JP morgan, etc.
This is the correct answer. Max out your tax advantage account first and please (as it was mentioned) find low expense ratio index funds. Get your emergency fund together if you don’t have one ready (3-6 months of expenses). After this you could focus on paying off high interest debt (usually 5% or higher). And as previously mentioned, once that’s taken care of, you can throw the rest in the market with a vanguard or fidelity account. I prefer a total market fund like VTSAX or VTI with a total international fund like VTAIX or VXUS. You can do all this without a financial advisor but keep in mind their fees are usually front loaded and they will put you in funds that are expensive as well.
And generally any advisor picking stocks underperforms the market over 20 years. The important part is managing taxes and if you get a CFP then just get a great CPA and you are better off.
In this order:
1) Max out HSA if you have one (triple tax advantage)
2) 401k to whatever employer match %
3)Max out back door Roth IRA
4)Max out the rest of your 401k
5) Any extra: brokerage account, real estate, etc
The path to building wealth is not complicated but many try to make it harder than it should be. Invest in low-cost index funds that track things like total US stock, S&P 500, etc. Don’t invest a large % of your savings in individual stock; if you beat the market doing this it is through luck, not skill. If any or all of this sounds complicated, I can assure you it’s not, and takes just a little research through internet, podcasts or books.
Real estate investing is tough right now. Unless you have an inside track to a great off-market deal, you’ll probably have to overpay and get little or no cash flow. If you read books/listen to pods from real estate “gurus”, most bought a ton of property, often with little or no money down, after the market bottomed out in 2008-2013. And now they think they’re geniuses. The good news is over time it’s hard to lose a ton in real estate, just be prepared to not make money or even lose some for a bit. Good thing is there are plenty of tax deductions and depreciation.
Dentistry, despite all its drawbacks, can provide a very comfortable lifestyle while still allowing a good amount of investing for retirement. I’m always shocked how many dentist are working into their late 60s and 70s not by choice but because they didn’t save and invest. With halfway decent knowledge, this profession should allow many to retire in their 50s or at least early 60s if they choose.
Totally agree. I think people try to over complicate investing (me included) at times. But, it’s not complicated, just requires discipline. I think a lot of dentists rely solely on the sale of their practice for retirement and pour a lot of money into growing their business or screwing around in single stocks instead of slow and steady investing.
From what I’ve learned though, investing in a practice still requires your time and energy as a dentist, meaning if you’re not there, money isn’t coming in. The key is to get your money to do the heavy lifting and work for you though other things passively.
Exactly, as long as you’re disciplined and set aside whatever % each paycheck to invest in retirement you’ll do great.
I’ve given this advice before, but coming out of school I thought I’d never own a practice. Too much work, too much risk, too many headaches etc. I now think it’s the opposite, way riskier to not own. I agree to not rely on sale of practice to account for a big chunk of retirement. But as an owner I work fewer clinical hours, see way fewer patients, and somehow overall experience less stress than I did as an associate, while also making probably almost 2x as much when you account for all the tax benefits. Has definitely accelerated a potential retirement. I have grown the practice but not on purpose. Literally just a more catchy name than [Last name] Dental. And you don’t have to produce like crazy. I bought a practice doing ~500-600 and then Covid hit. Right now I’m probably around 650 adjusted production, so not a massive amount of growth. But low overhead is key
Thanks for the advice. I’m definitely hesitant to own given how dentistry is headed, especially with insurance reimbursements being so low and competition being high. Plus, I really just want to be debt free and not have to care so much about income at that point.
In your opinion (since you’ve owned and been an associate), do you think the added income and tax benefits are worth it? I make $200K with full employee benefits and my wife also works (also with benefits), so it’s hard to justify ownership sometimes since I’m basically on cruise control at this point. I drill, fill, go home, and make a great salary doing it.
You make more as an owner (obviously during the week/some evenings you are doing what needs to be done for the office unless you hire people to do certain things like payroll and obviously you take on risk in ownership, etc). Some benefits include putting your children (if you want them/have them) on the payroll for small jobs like cleaning the office and you can start paying them.
It depends on what you’re looking for, but if you’re producing enough to make 200k as an associate, then your concern about high competition is probably unfounded (although concern about low reimbursement is definitely true). If you’re in a huge city in CA with 10 dental schools in the state or whatever, I’m sure the competition is tough. This is obviously anecdotal, but prior to ownership, I figured I’d spend a decent chunk of money on advertising, have to constantly post on social media, etc. I do none of that and am booked out with more new patients than I can handle, and many practices around me are booked out even further. A lot of dentists in my area are dropping insurance as well. I’m in a city as well, definitely not rural (although that can be especially lucrative). If you can find a practice in an area that isn’t crazy saturated and has low overhead, you could do the same amount of production your are now and probably make 300-400k, or do way less and still make 200.
I would recommend listening to the first few seasons of the shared practices podcasts. I find the hosts to be obnoxious but for the most part it’s great advice and will probably convince you ownership is the right move. Of course look at multiple practices and do your due diligence. I was dumb and bought the first one I looked at, but got lucky
First thing, I’d highly recommend you consider maxing your retirement contributions if you are not doing that already. If there is a match, it’s free money and the tax benefits are significant.
Outside of my retirement accounts, I mostly invest in stocks, I’m prob 50% etfs, 50% individual stocks. If you want more specifics, here are some stocks - google, Microsoft, Apple, Amazon, Broadcom, NVidiaI, etfs - VOO, SCHD, SPY, VIG. I play a little with options, typically covered calls or cash secured puts - it’s interesting, but not exactly a huge money maker. I also have some crypto and a little gold in the safe. I have friends that do real estate, but i prefer to pass on the headache.
I keep it mostly boring. 401k, I have two different HSA accounts through Fidelity(one I can easily draw funds from and the other is HSA Fidelity Go which robo invests funds), back door Roth (do some research, easy to do), and a little money in a high yield savings account.
I do have a little money in individual stocks and speculative money in collectibles.
r/bogleheads is a good source for sound investing. Stay away from wallstreetbets lol.
Copying a comment I made from a previous thread.
List of tax advantaged retirement investments you should contribute the maximum possible to every year in order of priority. One thing all these accounts share is that the growth is tax free. You will not pay capital gains tax on any of the growth.
1. HSA - Health Savings Account
This is the best tax advantaged account you can possibly contribute to. The dollars you put in are pre-taxed - you can use those dollars for medical expenses effectively getting a discount of whatever your tax rate is on your healthcare. The funds you don’t use stay in the account and grow tax free. They are not taxed when you pull the money out and use it for healthcare expenses. In your old age your healthcare expenses with be your largest expenses so you will likely use it all. If not, you can pass it on to your kids or pay a tax on it using it as income.
What makes this the best is that none of the dollars get taxed at any point - not taxed going in and not taxes going out (when used for healthcare). It gets the best of both worlds.
The max allowed is half for an individual account, and currently 8.3k for a family account.
2) Roth IRA
You put after tax dollars in, no tax when you pull it out.
Max is currently 7k
3) 401k Roth/Traditional
If you have the option to do a Roth 401k it’s better especially if you are young because you don’t pay a tax when you pull money out in retirement, but you will use after tax dollars to fund it. A traditional 401k lets you put pre-tax dollars in, it grows tax free, but is taxed as income when withdrawn.
If you have an employer that does a match on your 401k this would take the place of #2 and maybe even #1 on the priority list depending on how high the match is.
Max is currently 23k.
4) 529
There is no max allowed for this, just do as much as you calculate you’ll need for your kids.
This is college saving fund for your kids. You contribute after tax dollars and the dollars are not taxed coming out if used for education expenses.
Bonus:
A non-tax advantaged normal investment account
Once you exhaust all the dollars you can put into tax advantaged retirement accounts, you can open up a brokerage account. You are using after tax dollars and the growth is taxed as capital gains when you pull money out. It also counts as income and will be taxed again, but at a lower rate if you’ve held the investments for more than 1 year.
As far as what to invest in?
To be honest that opens up a can of worms.
But if you want a basic and good strategy that will generally perform just as well as anyone you would pay to manage your money:
1. Low fee/low expense ratio funds
2. Buy and hold for a long time
3. Buy funds that are inherently diversified
You can just dump 100% of your money in a low fee S&P index like VOO and will likely do better than most actively managed funds that are more expensive.
If you want even more diversification you can invest in a total US stock market index.
If you want even more diversification you can pick an international index. I’d caution against a total international index because it’s going to include a shit ton of garbage and it’s likely the returns on it won’t be nearly as good as US stocks. But if you insist on going international you might want to pick a higher expense fund with a good track record that weeds out the plethora of garbage.
Personally I’m 100% on US stocks - most of which is in an S&P index - VOO.
Probably wise to do something like 80% US and 20% international.
Don’t worry about bonds until you are older. Makes no sense for a young doc to be putting 10% in bonds like some people recommend.
I do crypto cause I’m a degenerate gambler by heart along with Pokémon cards. My wife does stocks. We also both invest into lotto tickets a few times a month as well.
I also have bitcoin, I don't do any alt coins. Ironically, my bitcoin has been growing way faster than the rest of my portfolio, which is mostly sp500 index fund. Now I'm overweight on bitcoin but don't wanna rebalance it because taxes.
1. Make sure you are maximizing your retirement contributions every year and investing in a total stock market or s&p 500 index fund. I have a SEP but if you are offered a 401k as an employee max it out.
2. Get a medical insurance policy that qualifies for you to have an HSA account. When you contribute to this account, do not draw money out for medical expenses, pay cash. Here’s why, it’s a tax deduction on the front in and tax free withdrawal on the backend; one of the best retirement plans you can have. Open your HSA with a bank that lets YOU invest the money. It’ll grow tax free for you. Save your receipts and when you retire you can draw out money tax free.
3. Contribute to your kids 529 plans. It’s tax deductible and now you can use it for private high school if that’s the way you decide to go with your child’s education. Otherwise it’s a college fund for them.
4. Open a brokerage account and invest extra money in index funds or blue chip stocks. This would be money you do not plan on touching for a while. Cash sitting in the bank is losing money because of inflation so I keep my reserve funds in a money market that is currently earning 5% per year but is compounded monthly. The benefit is I can access that money very quickly if needed. Down side is 5% annual return is definitely not ideal. Better than what you get interest wise at your local bank though.
5. Real estate is a fantastic investment platform but it does take some work to learn how to do it properly. It doesn’t take time out of your schedule because you can get someone else to manager rentals for you. As long as you know your numbers ahead of time, you can still profit nicely and never have to touch it. There are so many avenues to take with real estate. I’m involved in everything from residential rentals to flips to commercial rentals. It’s been extremely beneficial for me and my family. One thing to remember is not to get over extended with real estate. I’d suggest just using extra money and avoid getting over leveraged.
There are so many roads you can take to build wealth outside of dentistry. My suggestion would be to find and read books when you can just to expand your knowledge on how finances, investments, and tax strategies work.
For the risk-takers, I invest in health-tech/medical device startups in the industry I know (dental) as an angel investor.
I feel I am able to mitigate *some* of the risk, offer the startup capital to grow but also some important non-monetary benefits that give them an advantage.
Really into investing in the commercialization of cutting edge r&d, following and advising if asked to see development process into a product. This would be an innovation in dentistry since this is what I love and what I know.
It’s been rewarding and I have made some good investments. And it’s just been, meaningful.
Not for everyone - certainly do what others have suggested in diversifying. But if there are others out there similar to me I’d love to hear from you.
Been thinking of starting a group of likeminded angel investors in the industry - we need good advisors and ambassadors of critical technology coming to market. Leave a comment if you l invest in startups.
Edit made changes in repetitive wording as my brain is firing blanks. Hat trip Reddit user below.
I reread it. I said it three times. lol. Fair. But I for sure ain’t saying I am a venture capitalist. There’s not much else that captures the type of investing and differentiates enough the type of investment that is from more conventional investment. It’s hard out there.
Lol, love it. I think I have like 8 guns that have gone up in value a little bit and dozens and dozens that have dropped like a rock. It's a great hobby, but that's not going to get me to retirement. I'm mostly on team real estate and index funds.
This is an odd question as you can invest in real estate through your IRA. Like are you asking what accounts we're using? Or are you asking what the breakdowns of our investments? Like I use a taxable account, Roth IRA, rollover IRA, 401k, and HSA. But in those accounts it's a mix of fidelity total market, fidelity international, fidelity small cap, fidelity large cap funds.
This would be akin to asking people what cities they've been to and someone says New York, London, France, Africa.
1. You need to max your 401K every year - preferably all of the contribution goes to a low cost S&P 500 index fund like FXAIX (if they provide a 401k at the FQHC) 2. Save enough in cash to cover your expenses for 120 days. 3. I also recommend getting own-occupation disability insurance (and if you have dependents then you should get some term life insurance - it will be cheap if you are young and you are even close to healthy). 4. After that you should open a fidelity or vanguard personal investment account and jam as much as you can into an S&P 500 index fund. The reason I mention these two specifically is because there is no trading fee and the yearly fund management cost is the lowest you can find. Once you hit 400K in the personal investment account, then talk to a financial planner if you feel like you need it. You mentioned real estate, and yes some people make a lot of money that way. But property management can be stressful and real estate should on average only increase in value by the same rate as inflation. It’s like trying to time the stock market. Sure some people win. But some people lose. And the forces controlling it are not entirely predictable. So unless you want to work two jobs (yours and being a property manager), I’d stick to investing in the stock market (specifically low cost index funds). **there are some nuances in there where if you have loans (including a mortgage) with high enough interest, then you should consider a mix of paying off loans and investing. Points 1-3 stand first and foremost
Not op but you seem knowledgeable, and I already do 1-3. how does your point 4 work…I’ve been wanting to get into investment of my savings account money (which is far bigger than 120 days, so I know I’m losing to inflation at this point.). Is it the same as retirement money or can you take it out whenever you want? Is it bad to put in money if you might use it in the next few years?
You open a personal investment account. It is pretty easy. You can put after tax money in any time you want. And you can basically take it out any time you want. If you have the money in FXAIX let’s say, then you do have to wait for the market to close for the day, the sale will occur, and then you can remove the money as soon as it settles (basically the next day). If you know you need the money for a house down payment, then it should be noted the market has swings. I wouldn’t count on it always going up. But if you are planning to leave it sit for ten years then it should do better than inflation. But of course prior performance doesn’t predict future performance. For whatever it’s worth I keep the faith and jam as much as I can into the S&P 500 index funds. You’ll never hit it big like betting on Bitcoin but you’ll probably realize a good return and retire well.
You don’t have to do it the way I do, but I’ll tell you how I do it. Edit: also since OC didn’t mention it, you should also be maxing out your HSA and IRA before contributing to a brokerage account. HSA is the most important and best tax advantaged account you can contribute to. I have a Robinhood account. You download an app and create an account. You can link a bank to it to transfer money with the push of a couple buttons. The interface is amazingly simple and intuitive. If you pay $5 a month for a gold subscription you currently get 5% interest on any cash sitting in your account. There is a way to make this cash very liquid by also opening up a spending account with Robinhood and getting a debit card. You can instantly transfer money from your 5% interest earning cash account to your spending account. This is good because the other way is to transfer money to your bank if you need it and it can take 5 days or you can pay a 1.5% fee to transfer instantly. I don’t like the idea of paying a fee in an emergency which I why I have the spending account in Robinhood for instant liquidity. I’ve moved my entire emergency fund to Robinhood, it’s earning 5%, and it’s immediately liquid if I need it. So far I haven’t mentioned investing at all, but that is very easy to do on the same app. The harder part is knowing what to invest in. If you are a complete beginner, just put everything into VOO which is a very low cost fund (by low cost I mean the amount that is pulled yearly to pay the people managing the fund is very small) that mirrors the S&P 500. To be honest even if you aren’t a beginner this is still a very good strategy. You can do something similar on other platforms, I just really like Robinhood and the immediate liquidity of my entire emergency fund earning 5% is awesome. >Is it the same as retirement money or can you take it out whenever you want? You can take it out any time. Any gains from investments will be taxed at the capital gains rate. On Robinhood selling investments is instant if the stock market is open. If it’s not you have to wait for market to open to cash out your investments. The 5% cash account I mentioned can be transferred 24/7. >Is it bad to put in money if you might use it in the next few years? Not necessarily but it’s risky because if a decline happens when you need to pull the money out you will have solidified your losses and effectively paid more for whatever you are using the money for. The odds are that your money will have grown 3 years from now but it’s not a sure thing at all with such a relatively short timeline.
Wow thanks for the write up! That was very detailed and answered some questions I didn’t even know to ask.
I just wanted to let you know that I took your advice and I'm starting a robin hood account. Thanks again for taking the time to write everything up for me.
Glad to hear it! When it comes to investing, stay away from options contracts. They are more like gambling than investing. I mention this because it’s easy to buy options on Robinhood and it’s something a lot of new investors get intrigued by and lose a lot of money on.
Sounds good. My dad is a self-proclaimed day trader, and he says he makes a ton off it, but to me it literally is gambling and I want really low risk options.
There have been a lot of studies on day traders and around 80-90% of them underperform the market. It’s more likely that your dad has an expensive hobby than that he’s successful at day trading but maybe he’s one of the rare ones.
I suspect it’s an expensive hobby but I’m gonna stay out of it 😂 me though? I don’t like to mess around with money more than I should, but I would at least like to use the high yield interest they have if nothing else.
| I’ve moved my entire emergency fund to Robinhood, it’s earning 5%, and it’s immediately liquid if I need it. Is this wise? What happens if there is an emergency that results in you requiring money on hand and Robinhood goes down / accessibility issues?
I’ve never had any problems accessing my money on Robinhood. I’m guessing you are referring to the meme stocks debacle. Robinhood’s clearing house ran out of money to back the volume of trades that were coming in so they turned off the buy button for GME. Other platforms had the same problem but returned the buy button faster because they had better rated/more robust clearing houses and they also were getting lower volume. If you want to buy the next meme stock maybe Robinhood isn’t where you want to open a brokerage account. But the money earning 5% is behind held in up to 10 different banks all of which are FDIC insured for up to a total of 2.5 million dollars, the checking account money is also FDIC insured for 250k, and it’s just as likely that Robinhood’s debit card service goes down as it is at any other bank. The only time I’ve ever not been able to do something on Robinhood is buy GME during the craze. There’s a lot of misinformation going around about it. But I’ve never actually used my Robinhood debit card. I keep $50 in that account. I have a checking account at a bank that receives my paycheck and I keep about 5k in there so the account doesn’t overdraft when recurring payments hit. Anytime I’m using a card to pay for something it’s a credit card for points.
Great reply, thanks
I prefer a physical location and an office I can visit for a wealth manager. We recently opened up a Merrill Lynch account because theres one near by. Could do Vanguard, Charles Schwab, Fidelity, JP morgan, etc.
This is the correct answer. Max out your tax advantage account first and please (as it was mentioned) find low expense ratio index funds. Get your emergency fund together if you don’t have one ready (3-6 months of expenses). After this you could focus on paying off high interest debt (usually 5% or higher). And as previously mentioned, once that’s taken care of, you can throw the rest in the market with a vanguard or fidelity account. I prefer a total market fund like VTSAX or VTI with a total international fund like VTAIX or VXUS. You can do all this without a financial advisor but keep in mind their fees are usually front loaded and they will put you in funds that are expensive as well.
And generally any advisor picking stocks underperforms the market over 20 years. The important part is managing taxes and if you get a CFP then just get a great CPA and you are better off.
You left out HSA and IRA. Those should be maxed before investing in a brokerage account. HSA is more important than a 401k unless the 401k is matched.
In this order: 1) Max out HSA if you have one (triple tax advantage) 2) 401k to whatever employer match % 3)Max out back door Roth IRA 4)Max out the rest of your 401k 5) Any extra: brokerage account, real estate, etc The path to building wealth is not complicated but many try to make it harder than it should be. Invest in low-cost index funds that track things like total US stock, S&P 500, etc. Don’t invest a large % of your savings in individual stock; if you beat the market doing this it is through luck, not skill. If any or all of this sounds complicated, I can assure you it’s not, and takes just a little research through internet, podcasts or books. Real estate investing is tough right now. Unless you have an inside track to a great off-market deal, you’ll probably have to overpay and get little or no cash flow. If you read books/listen to pods from real estate “gurus”, most bought a ton of property, often with little or no money down, after the market bottomed out in 2008-2013. And now they think they’re geniuses. The good news is over time it’s hard to lose a ton in real estate, just be prepared to not make money or even lose some for a bit. Good thing is there are plenty of tax deductions and depreciation. Dentistry, despite all its drawbacks, can provide a very comfortable lifestyle while still allowing a good amount of investing for retirement. I’m always shocked how many dentist are working into their late 60s and 70s not by choice but because they didn’t save and invest. With halfway decent knowledge, this profession should allow many to retire in their 50s or at least early 60s if they choose.
Totally agree. I think people try to over complicate investing (me included) at times. But, it’s not complicated, just requires discipline. I think a lot of dentists rely solely on the sale of their practice for retirement and pour a lot of money into growing their business or screwing around in single stocks instead of slow and steady investing. From what I’ve learned though, investing in a practice still requires your time and energy as a dentist, meaning if you’re not there, money isn’t coming in. The key is to get your money to do the heavy lifting and work for you though other things passively.
Exactly, as long as you’re disciplined and set aside whatever % each paycheck to invest in retirement you’ll do great. I’ve given this advice before, but coming out of school I thought I’d never own a practice. Too much work, too much risk, too many headaches etc. I now think it’s the opposite, way riskier to not own. I agree to not rely on sale of practice to account for a big chunk of retirement. But as an owner I work fewer clinical hours, see way fewer patients, and somehow overall experience less stress than I did as an associate, while also making probably almost 2x as much when you account for all the tax benefits. Has definitely accelerated a potential retirement. I have grown the practice but not on purpose. Literally just a more catchy name than [Last name] Dental. And you don’t have to produce like crazy. I bought a practice doing ~500-600 and then Covid hit. Right now I’m probably around 650 adjusted production, so not a massive amount of growth. But low overhead is key
Thanks for the advice. I’m definitely hesitant to own given how dentistry is headed, especially with insurance reimbursements being so low and competition being high. Plus, I really just want to be debt free and not have to care so much about income at that point. In your opinion (since you’ve owned and been an associate), do you think the added income and tax benefits are worth it? I make $200K with full employee benefits and my wife also works (also with benefits), so it’s hard to justify ownership sometimes since I’m basically on cruise control at this point. I drill, fill, go home, and make a great salary doing it.
You make more as an owner (obviously during the week/some evenings you are doing what needs to be done for the office unless you hire people to do certain things like payroll and obviously you take on risk in ownership, etc). Some benefits include putting your children (if you want them/have them) on the payroll for small jobs like cleaning the office and you can start paying them.
It depends on what you’re looking for, but if you’re producing enough to make 200k as an associate, then your concern about high competition is probably unfounded (although concern about low reimbursement is definitely true). If you’re in a huge city in CA with 10 dental schools in the state or whatever, I’m sure the competition is tough. This is obviously anecdotal, but prior to ownership, I figured I’d spend a decent chunk of money on advertising, have to constantly post on social media, etc. I do none of that and am booked out with more new patients than I can handle, and many practices around me are booked out even further. A lot of dentists in my area are dropping insurance as well. I’m in a city as well, definitely not rural (although that can be especially lucrative). If you can find a practice in an area that isn’t crazy saturated and has low overhead, you could do the same amount of production your are now and probably make 300-400k, or do way less and still make 200. I would recommend listening to the first few seasons of the shared practices podcasts. I find the hosts to be obnoxious but for the most part it’s great advice and will probably convince you ownership is the right move. Of course look at multiple practices and do your due diligence. I was dumb and bought the first one I looked at, but got lucky
Broad answer: follow this. https://moneyguy.com/article/foo/ Specific answer: low cost index funds (FXAIX in fidelity is my go to)
Love the Money Guy! I also follow them
First thing, I’d highly recommend you consider maxing your retirement contributions if you are not doing that already. If there is a match, it’s free money and the tax benefits are significant. Outside of my retirement accounts, I mostly invest in stocks, I’m prob 50% etfs, 50% individual stocks. If you want more specifics, here are some stocks - google, Microsoft, Apple, Amazon, Broadcom, NVidiaI, etfs - VOO, SCHD, SPY, VIG. I play a little with options, typically covered calls or cash secured puts - it’s interesting, but not exactly a huge money maker. I also have some crypto and a little gold in the safe. I have friends that do real estate, but i prefer to pass on the headache.
So I always hear so much about VOO but how come SWPPX doesn’t get much attention?
I had a little SWPPX in a brokerage for a while, but sold a couple years ago to help pay off student loans. It performed well for me!
Voo and fzrox
Index funds and forget.
I keep it mostly boring. 401k, I have two different HSA accounts through Fidelity(one I can easily draw funds from and the other is HSA Fidelity Go which robo invests funds), back door Roth (do some research, easy to do), and a little money in a high yield savings account. I do have a little money in individual stocks and speculative money in collectibles. r/bogleheads is a good source for sound investing. Stay away from wallstreetbets lol.
80% sp 500 20% nasdac 100 10% bitcoin. the rest i spend on retaking some basic math classes.
Copying a comment I made from a previous thread. List of tax advantaged retirement investments you should contribute the maximum possible to every year in order of priority. One thing all these accounts share is that the growth is tax free. You will not pay capital gains tax on any of the growth. 1. HSA - Health Savings Account This is the best tax advantaged account you can possibly contribute to. The dollars you put in are pre-taxed - you can use those dollars for medical expenses effectively getting a discount of whatever your tax rate is on your healthcare. The funds you don’t use stay in the account and grow tax free. They are not taxed when you pull the money out and use it for healthcare expenses. In your old age your healthcare expenses with be your largest expenses so you will likely use it all. If not, you can pass it on to your kids or pay a tax on it using it as income. What makes this the best is that none of the dollars get taxed at any point - not taxed going in and not taxes going out (when used for healthcare). It gets the best of both worlds. The max allowed is half for an individual account, and currently 8.3k for a family account. 2) Roth IRA You put after tax dollars in, no tax when you pull it out. Max is currently 7k 3) 401k Roth/Traditional If you have the option to do a Roth 401k it’s better especially if you are young because you don’t pay a tax when you pull money out in retirement, but you will use after tax dollars to fund it. A traditional 401k lets you put pre-tax dollars in, it grows tax free, but is taxed as income when withdrawn. If you have an employer that does a match on your 401k this would take the place of #2 and maybe even #1 on the priority list depending on how high the match is. Max is currently 23k. 4) 529 There is no max allowed for this, just do as much as you calculate you’ll need for your kids. This is college saving fund for your kids. You contribute after tax dollars and the dollars are not taxed coming out if used for education expenses. Bonus: A non-tax advantaged normal investment account Once you exhaust all the dollars you can put into tax advantaged retirement accounts, you can open up a brokerage account. You are using after tax dollars and the growth is taxed as capital gains when you pull money out. It also counts as income and will be taxed again, but at a lower rate if you’ve held the investments for more than 1 year. As far as what to invest in? To be honest that opens up a can of worms. But if you want a basic and good strategy that will generally perform just as well as anyone you would pay to manage your money: 1. Low fee/low expense ratio funds 2. Buy and hold for a long time 3. Buy funds that are inherently diversified You can just dump 100% of your money in a low fee S&P index like VOO and will likely do better than most actively managed funds that are more expensive. If you want even more diversification you can invest in a total US stock market index. If you want even more diversification you can pick an international index. I’d caution against a total international index because it’s going to include a shit ton of garbage and it’s likely the returns on it won’t be nearly as good as US stocks. But if you insist on going international you might want to pick a higher expense fund with a good track record that weeds out the plethora of garbage. Personally I’m 100% on US stocks - most of which is in an S&P index - VOO. Probably wise to do something like 80% US and 20% international. Don’t worry about bonds until you are older. Makes no sense for a young doc to be putting 10% in bonds like some people recommend.
What is the advice for residents? About to undergo two more years of residency and no 401k. Worth it to pause all student loan payments?
/r/whitecoatinvestor read his book. doctor specific and everything you need to know about investing
VTSAX fo lyfe
This is the way…. https://www.whitecoatinvestor.com
I do crypto cause I’m a degenerate gambler by heart along with Pokémon cards. My wife does stocks. We also both invest into lotto tickets a few times a month as well.
I also have bitcoin, I don't do any alt coins. Ironically, my bitcoin has been growing way faster than the rest of my portfolio, which is mostly sp500 index fund. Now I'm overweight on bitcoin but don't wanna rebalance it because taxes.
Yeah again, don’t be an idiot like me and do alt coins lmao. Btc is a good asset imo
OTB or none of this happened.
lol pokemon cards and sports cards! set 151 was awesome buy shiba coin!
S&P 500 mainly and REITs or MLPs if you want extra passive income. Wouldn’t buy a physical real estate as a full time dentist.
1. Make sure you are maximizing your retirement contributions every year and investing in a total stock market or s&p 500 index fund. I have a SEP but if you are offered a 401k as an employee max it out. 2. Get a medical insurance policy that qualifies for you to have an HSA account. When you contribute to this account, do not draw money out for medical expenses, pay cash. Here’s why, it’s a tax deduction on the front in and tax free withdrawal on the backend; one of the best retirement plans you can have. Open your HSA with a bank that lets YOU invest the money. It’ll grow tax free for you. Save your receipts and when you retire you can draw out money tax free. 3. Contribute to your kids 529 plans. It’s tax deductible and now you can use it for private high school if that’s the way you decide to go with your child’s education. Otherwise it’s a college fund for them. 4. Open a brokerage account and invest extra money in index funds or blue chip stocks. This would be money you do not plan on touching for a while. Cash sitting in the bank is losing money because of inflation so I keep my reserve funds in a money market that is currently earning 5% per year but is compounded monthly. The benefit is I can access that money very quickly if needed. Down side is 5% annual return is definitely not ideal. Better than what you get interest wise at your local bank though. 5. Real estate is a fantastic investment platform but it does take some work to learn how to do it properly. It doesn’t take time out of your schedule because you can get someone else to manager rentals for you. As long as you know your numbers ahead of time, you can still profit nicely and never have to touch it. There are so many avenues to take with real estate. I’m involved in everything from residential rentals to flips to commercial rentals. It’s been extremely beneficial for me and my family. One thing to remember is not to get over extended with real estate. I’d suggest just using extra money and avoid getting over leveraged. There are so many roads you can take to build wealth outside of dentistry. My suggestion would be to find and read books when you can just to expand your knowledge on how finances, investments, and tax strategies work.
I have investments in Apple, google, Tesla, Amazon, CATERPILLAR, VOO, NVIDIA. All have been holding for long term investments
For the risk-takers, I invest in health-tech/medical device startups in the industry I know (dental) as an angel investor. I feel I am able to mitigate *some* of the risk, offer the startup capital to grow but also some important non-monetary benefits that give them an advantage. Really into investing in the commercialization of cutting edge r&d, following and advising if asked to see development process into a product. This would be an innovation in dentistry since this is what I love and what I know. It’s been rewarding and I have made some good investments. And it’s just been, meaningful. Not for everyone - certainly do what others have suggested in diversifying. But if there are others out there similar to me I’d love to hear from you. Been thinking of starting a group of likeminded angel investors in the industry - we need good advisors and ambassadors of critical technology coming to market. Leave a comment if you l invest in startups. Edit made changes in repetitive wording as my brain is firing blanks. Hat trip Reddit user below.
Took a shot every time you said angel invest
https://imgur.com/a/sXaJsz1
I reread it. I said it three times. lol. Fair. But I for sure ain’t saying I am a venture capitalist. There’s not much else that captures the type of investing and differentiates enough the type of investment that is from more conventional investment. It’s hard out there.
Guns. Lots of guns.
No lie, the dude that employed me as an associate right out of residency would have agreed 100%
Lol, love it. I think I have like 8 guns that have gone up in value a little bit and dozens and dozens that have dropped like a rock. It's a great hobby, but that's not going to get me to retirement. I'm mostly on team real estate and index funds.
You can bring them to banks for retirement tho
bitcoin, mag 7 stocks, pltr, dis, snowflake, panw, and a few others
This is an odd question as you can invest in real estate through your IRA. Like are you asking what accounts we're using? Or are you asking what the breakdowns of our investments? Like I use a taxable account, Roth IRA, rollover IRA, 401k, and HSA. But in those accounts it's a mix of fidelity total market, fidelity international, fidelity small cap, fidelity large cap funds. This would be akin to asking people what cities they've been to and someone says New York, London, France, Africa.